BANKRUPTCY COURTS AND COVID 

GOOD NEWS - The pandemic slowed down but did not stop the bankruptcy courts. The courts adapted to this latest crisis much as they have adapted to all past crisis situations. In person court hearings were replaced by telephonic court hearings, most case and motion filing swere not affected because the court already used electronic filing systems. Trustee meetings were adjusted so that all, instead of some, were to be held telephonically. Documents were transmitted over secured lines to secure websites, as was previously the case. Except for the lack of personal ocntact, most things remained the same, except everything took longer - mostly because court staff were not working in the courts, but rather from home, with remote access. 

At some point, someone needs to stamp something ro sign something, or needs information regarding a situation, and this is where things slowed down. One of my clients discharges was delayed a few months due to the bankrutpcy clerks' filing backlog, although clients were still protected by the automatic stay during this time. 

Slowly the courts are opening again to physical visits, assuming you are not sick. Before you know it, things will generally get back to almost normal. There will probably be a surge in filings once mortgage foreclosure moratoriums expire. 

Also, some new issues will likely arise in bankruptcy filings, such as possible misuse of paycheck protection loans, treatment of IRA and 401(k) loans and unemployment supplements, preferential paybacks of family loans, ability to pay Chapter 13's due to lost employment, etc. For example, if inflation hits us suddenly and hard, then standard allowance tables and ceilings may not realistically apply to adequately protect debtors. It will be once again an interesting and challenging time for attorneys and their clients. 

Still, we will all adapt. We always have in the past. This time will not be different. 

So, hang in there. 

Marvin Wolf, Esq.

THE MONTH BEFORE CHRISTMAS By Marvin Wolf ‘Twas the month before Christmas and all through the city decorations were up but the sight wasn’t pretty for although Thanksgiving was still barely here all the stores were dressed up for the end of the year. Sleighbells here, reindeers there, holly boughs all around but nary a Tom Turkey feather is found. ‘twas as though Saint Nick put the bird in a hearse and decreed to Thanksgiving, henceforth, Christmas comes first. That ancient old Elf must have screamed with a wail, “That turkey interferes with our holiday sales”; so we’re left with no choice but to conquer the bird, and sing Christmas carols till no gobble is heard. A Thanksgiving sale is but a single buy day; so lets perk it up with a heavy Black Friday, so out with old feathers, pilgrim hats won’t be seen; we’ll pretend those props came from last Halloween. We need to make sales and to keep our costs down so you’ll see Christmas windows all over the town. decorating windows twice; why that’s nothing but trouble And we prefer Ho Ho Ho to Gobble Gobble Gobble. Stores open late, tinsel sparkling with glee. MasterCard, Visa – final spending spree. but this holiday season’s no season for thanks, while the Federal Reserve elves print money for banks. Our economy needs consumers so let’s spend for Santa Never mind when the bills come we will all need Mylanta; But resistance is futile; we must accept our fate. so Merry Christmas to all on this November 28.

Recent Bankruptcy News - July 2015

Recent Bankruptcy News: Rapper 50 Cent (nee Curtis Jackson) files Chapter 11 after a $5 million dollar judgment for posting a rival's girlfriend's sex tape online in 2009 and making derogatory comments about it in a voice-over. However, the bankruptcy judge ordered that the punitive damages portion of the trial is going to continue. This could be a problem for 50 Cent because malicious and willful injuries might not be dischargeable in bankruptcy. Mr. Cent claims he owes $28 million in debts. He may have to change his motto from "Get Rich or Die Trying" to "Get Rich or File Chapter 11." Chase Bank was sanctioned in the credit card robo-signing scandal for questionable and invalid debt data sold to third party collectors. Among other punishments, Chase must pay $50 million in refunds and stop selling some debts. U.S. Supreme Court releases its decision in Bank of America v. Caulkett. You still can strip unsecured second liens, but must use Chapter 13 - not Chapter 7. Some lawyers and a few judges believed that strip-off could be done in Chapter 7, but the statutes seemed pretty clear. The real issue is whether creditors will start challenging strip-offs in Chapter 13. Senators are advocating for a bill to allow Puerto Rico to file for bankruptcy to reorganize its debts.

Surveys and Other Lies

The economy is improving, except it's getting worse, depending on who you talk to. Statistics lie as do many government reports and surveys. As an example, I was just contacted by phone by some organization doing a survey. "Just four questions," they said, and then proceeded to ask four heavily slanted questions about mandatory ratings for childrens games designed to elicit the answer they really wanted from me. Being a lawyer, I am a professional pain in the butt, so I didn't give them the answers they wanted. They stated that kids spend 10 hours a day on TV and video games, so would I support a rating system like in the movies. Of course, I said no. I added that if a child spends 10 hours a day on these things, the parents were at fault. They didn't like that answer, so at the end, they said, "Well, since you don't have children or grandchildren under 15 we won't be using you in the survey." The problem is - they never asked if I had kids or grandkids that age. I said wait, I never said I didn't..." The phone hung up. So if they simply eliminate any calls that don't match what their pitch is, they can claim that their survey showed a large margin in favor of their proposals. Many surveys and polls do the same thing. The result is that they are all unreliable. If I pitch it right, I can probably prove in a survey that Adolf Hitler would be a better president than Barack Obama. "I'm not saying he was a good guy, but just judging on leadership skills, who would you say would make a better President?" "Ignoring for a second all the Jews he killed, who would you say was a bigger patriot to his country?" If you avoid calling Democrats and northern states, and throw out the answers you don't like, you can probably claim a majority in favor of Hitler over Obama. Except it's all a lie. It is difficult to say exactly where our economy is going, but I suggest ignoring the "experts." The one figure I look at is not unemployment (which everyone knows is skewed) but rather I look at exchange rates. If Europe and the Euro are in such trouble compared to us, why is it $1.33 American to buy one Euro? If the cost of living is stable, why does everything cost more? My advice is "Don't trust the surveys, trust your wallet." Besides, according to my own personal survey, 10 out of 9 bankruptcy lawyers agree with me. Who can argue with those numbers?

What If They WON'T Take The House?

One of the harder issues in bankruptcy is surrender of assets. With a regular asset like a car, most of the time the creditor wants the asset returned quickly so they can sell it and cut their losses. However, with real estate, we live in a Bizarro world. Sometimes, the mortgage creditor wants to sell the house, but not quite yet. The problem is that as long as the title to the property is in the debtor's name, the debtor is responsible for taxes, insurance and any fines issued against the property. The bank may not want to take on those legal and financial responsibilities until they have a buyer, or they want to wait for the market to improve, interest rates to rise, or just control the rate at which defaulted properties go for sale to control real estate prices. Great for them, not so great for a debtor. Are they allowed to wait in order to maximize their eventual recovery forever? Even if it harms the debtor? Is there any way to force the creditor bank to take the house? This is an open issue in bankruptcy. Recently, in one case, the First Circuit has said generally "no" - but possibly "maybe" if the facts were a little different (citation omitted so laymen can follow the reasoning). There is also the issue of more limited Federal jurisdiction of the Bankruptcy Courts in general due to recent U.S. Supreme Court decisions. I think that until the courts work out the law, a wiser decision may be to post a document on the court docket showing that you offered the house to them and they refused. This perhaps may open up an argument regarding the deficiency on the house based on a "failure to mitigate damages" argument. Maybe this could help when the bank inevitably issues a Form 1099 as to the amount of the loss. I don't give tax advice here but it is something to consider discussing with your tax lawyer or accountant. To sum up in layman's terms, I think you can't force them to accept the deed, but you might be able to use their refusal to accept it to some legal effect in some circumstances. It's just a thought, for now. But it wouldn't be the first time a bank's gaming the system eventually came back to bite them in some other way.

I haven't been on here in a while. I added a new blog with WordPress so didn't pay much attention to this one. So what is new? For one thing, the number of debtors filing their own bankruptcies has skyrocketed. I don't know if it's that people can't afford lawyers or are just getting cheap and think they can handle it on their own, but the number of "pro se" non-lawyer assisted filers is as large as the number of pro se filers that get into trouble with some of the finer points of bankruptcy after they file. Whether it involves exemptions, tax refunds, inheritances, car creditors or omitted creditors, I get calls post-filing asking for advice to fix a screwed up case. By then, it is often too late to fix anything because once the trustee get a smell of an asset, it's like blood in the water to a shark. Hiring me up front is often cheaper than doing it on your own and then getting into expensive trouble, but try to tell that to a debtor. They will be changing the forms again to try to make it easier for pro se debtors to file without an attorney. That's like giving out free guns and bullets and saying just follow the instruction manual. Bankruptcy is not just filling out a form - it's knowing the statutes, the local decisions in interpreting the statutes, knowing the local rules and practices and knowing each judge and trustee and their particular idiosyncrasies. Can I fix a broken case? Sometimes, but it usually ends up costing twice as much as doing it right the first time. Penny wise, pound foolish, they say. But human nature does not change.

ONE HUNDRED NEW FEATURES

The U.S. Treasury is once again redesigning the $100 bill. Since this is the most counterfeited bill passed outside the U.S., the Treasury wants to make sure foreigners are reassured they are spending the most secure and complex deflated currency in the world.

Because counterfeiters are getting more sophisticated and have access to better computers, the new bill contains numerous new security features. There also may be many unrevealed security features, but this article will cover the most obvious changes.

For one thing, the microprinting has changed. Federal Reserve Chairman Ben Bernanke ordered the microprinting to now read “The United States of Goldman Sachs” so all foreign investors could be reassured as to who really runs America.

Along with the microprinting, there is a new blue security stripe containing microlensed images that move when you move the bill. Tiny Liberty Bells change into 100s when you tilt the bill. As inflation increases, you can shake the bill and the 100s will automatically turn into 1,000s. If you turn the security strip upside down, the 3-D Liberty Bells turn into the blue aliens from Avatar. Additionally, if you manipulate the heat sensitive 100 on the lower right hand corner with your thumb, you can play Pac-Man - Ben Franklin’s head moves and gobbles up the Liberty Bells.

The bill contains an inkwell that is invisible when you tilt it one way but appears when you tilt it the other way, to represent how the Treasury has cooked the books of the United States Treasury. The inkwell is filled with red ink to represent our deficit. The Liberty Bell also appears and disappears in the inkwell, to symbolize freedom drowning in red ink.

Benjamin Franklin will no longer have a wrinkled forehead, thanks to micro-Botoxing of each bill. If you fold the bill along his forehead, the fold will disappear when you unfold it, just like Demi Moore.

Rumored to be next on the security agenda - adding an iPhone app to the bill so you can call overseas to see how your money is doing. Foreigners can also use the new currency as a coupon to buy a Happy Meal at McDonalds.

The Treasury was concerned about complaints that the older redesigned bills looked like monopoly money. Due to the redesign, there will be no more such concerns since the bills now look like Las Vegas slot machine symbols. Everyone loves Las Vegas.

Treasury Secretary Tim Geithner’s electronic signature will grace the new hundred dollar bills, so that each time a consumer spends one, it will look like Tim is paying his taxes.

Not everyone is happy about the changes. Some think the changes are unnecessary since the U.S. government steals far more money from citizens than do counterfeiters. Another negative is that given the complexity of the security features and the cost of the licensing payments to Bill Gates, each new one hundred dollar bill actually costs more than one hundred dollars to produce. But President Obama is convinced the cost is worth it to stimulate the economy and that replacing the motto “E Pluribus Unum” with “Intel Inside” will stabilize the dollar in the long run.

Rush Limbaugh is still alleging the new bills will have a “Press 1 for English and 2 for Spanish” feature. The Treasury did not respond to that allegation, but fortunately, it appears there is no truth to the rumor that the Liberty Bell was to be replaced by the Taco Bell logo. U.S. Treasurer Rosie Rios allegedly stated in response to the rumor, “The U.S. bill must remain American. ¿Entienda, gringo? Ben Franklin nunca habló español.” Verdad, Rosie, Verdad.